Central European Distribution Corporation Announces Full Year 2009 Results; Updates 2010 Outlook
BALA CYNWYD, Pa., March 1 /PRNewswire-FirstCall/ -- Central European Distribution Corporation (Nasdaq: CEDC) today announced its results for the fiscal year 2009. Net Sales for the twelve months ended December 31, 2009 were $1,507.1 million as compared to $1,647.0 million reported for the same period in 2008, which represents a decline of 8.5% driven primarily by the approximate 28% average devaluation of our primary functional currencies as well as a substantial decrease in net sales by our Polish distribution business partially offset by the effects of the consolidation of the Russian Alcohol Group in 2009. Net Sales for the fourth quarter of 2009 was $537.0 million as compared to $459.6 million for the same period in 2008, primarily driven by the consolidation of the Russian Alcohol Group in 2009 partially offset by a decrease in net sales of our Polish distribution business.
CEDC announced net income on a U.S. GAAP basis (as hereinafter defined) for the year was $78.3 million or $1.45 per fully diluted share, as compared to net loss of $18.6 million or $0.42 per fully diluted share, for the same period in 2008. On a comparable basis, CEDC announced net income of $127.9 million, or $2.37 per fully diluted share, for the full year 2009, as compared to $128.0 million, or $2.86 per fully diluted share, for the same period in 2008. The number of fully diluted shares used in computing the full year earnings per share was 53.9 million for 2009 and 44.1 million for 2008. Operating profit on a comparable basis for the year 2009 was $222.9 million as compared to $206.9 million for 2008.
The net loss on a U.S. GAAP basis for the 4th quarter of 2009 was $94.9 million or $1.52 per fully diluted share, as compared to net loss of $82.3 million or $1.76 per fully diluted share, for the same period in 2008. On a comparable basis, CEDC announced net income of $72.5 million, or $1.15 per fully diluted share, for the 4th quarter 2009, as compared to $52.5 million, or $1.11 per fully diluted share, for the same period in 2008. Operating profit on a comparable basis for the 4th quarter of 2009 was $108.8 million as compared to $83.2 for 2008. For a complete reconciliation of comparable net income to net income reported under United States Generally Accepted Accounting Principles ("U.S. GAAP"), please see the section "Unaudited Reconciliation of Non-GAAP Measures".
The Company also announced it has updated its full year 2010 net sales guidance from $1.80-$2.00 billion to $1.80-$1.90 billion and its full year comparable fully-diluted earnings per share guidance from $3.00-$3.15 to $2.50-$2.62. The Company is also providing full year 2010 operating profit guidance of $315 to $330 million (an increase of approximately 44% over full year 2009 comparable operating profit) which includes approximately $18 million of depreciation and amortization for the year. This revised guidance includes exchange rates assumptions that have moved from 2.80-2.85 PLN/USD to 2.85-2.95 PLN/USD for the Polish Zloty and from 29.00-29.50 RUR/USD to 29.50-30.00 RUR/USD for the Russian Ruble, as well as an expected $0.40 to $0.45 annual dilutive impact on fully dilutive earnings per share from the recent debt and equity offerings that were completed in November and December 2009, which includes the estimated net interest expense of approximately $98-$102 million for the full year 2010. The number of fully diluted shares used in computing the full year 2010 guidance is approximately 70.1 million.
William Carey, President and CEO commented, "During the fourth quarter of 2009 we experienced a soft top line performance, driven mainly by weakness in the Polish distribution business as compared to the fourth quarter 2008, mainly due to the Polish excise increase that took place on January 1, 2009. The excise increase generated additional revenue of approximately $40 million in our Polish distribution business in the fourth quarter 2008 as compared to the fourth quarter 2009. We were however, able to see substantial improvements on our comparable gross and operating margins, benefiting from a positive sales mix between production and distribution, as well major costs reductions that took place during the year, both of which had a very positive impact on the fourth quarter operating results even while operating in a continued soft consumer environment."
William Carey, President and CEO continued, "We have spent the last twelve months strengthening our ownership position of some of our key assets which places the Company in a strong position to benefit from the consumer recovery which we anticipate to accelerate towards the second half of 2010. We strongly believe the dilutive impact of our fourth quarter 2009 refinancing is more than justified given our expectations as to the 3-5 year growth opportunity in our core markets, especially Russia. With the recent regulatory changes in Russia relating to, combating the grey market we anticipate stronger consumer demand in 2010 and renewed trends toward premiumization. Our strong market position in our core markets places us in a solid position to take advantage of what we anticipate will be a 3-5 year growth cycle of premiumization and strong demand for imported products. Having recently taken control of our largest investment and strongest cash flow generator for the Company, the Russian Alcohol Group, and obtaining 100% equity ownership of both of our vodka production businesses in Russia during the second half of 2009, we can now look forward to a clearer path to start to deliver on our 2010 objectives. The refinancing strengthened our balance sheet and significantly improved the maturity profile of our liabilities. These changes will allow management to direct its focus on executing the business objectives outlined below:
- Continued reduction of net leverage thru cash flow generation and potential asset disposals
- Integration of Parliament and the Russian Alcohol Group
- Improve gross margins by 300 to 400 basis points
- Improve operating margins by 200 to 300 basis points
- Increase profitable market share in our core markets of Russia, Poland and Hungary
- New product development, including,
- Russian brandy
- New vodka launch in Poland
- New mainstream vodka launch in Russia
- Sign new import agreements in our core markets of Russia, Poland and Hungary
- Expand export of our core brands in key international growth markets
- Strengthen focus on brands through a planned divestiture of the distribution business and other non-core assets"
CEDC has reported net income and fully diluted net income per share in accordance with GAAP and on a non-GAAP basis, referred to in this release as comparable non-GAAP net income. CEDC's management believes that the non-GAAP reporting giving effect to the adjustments shown in the attached reconciliation provides meaningful information and an alternative presentation useful to investors' understanding of CEDC's core operating results and trends. CEDC discusses results and guidance on a comparable basis in order to give investors better insight into underlying business trends from continuing operations. CEDC's calculation of these measures may not be the same as similarly named measures presented by other companies. These measures are not presented as an alternative to net income computed in accordance with GAAP as a performance measure, and you should not place undue reliance on such measures. A reconciliation of GAAP to non-GAAP measures can be found in the section "Unaudited Reconciliation of Non-GAAP Measures" at the end of this press release.
CEDC is the largest producer of vodka in the world and Central and Eastern Europe's largest integrated spirit beverage business. CEDC produces the Green Mark, Absolwent, Zubrowka, Bols, Parliament, Zhuravli, Royal and Soplica brands, among others. CEDC currently exports its products to many markets around the world, including the United States, England, France and Japan.
CEDC also is the leading national distributor of alcoholic beverages in Poland by value, and a leading importer of alcoholic beverages in Poland, Russia and Hungary. In Poland, CEDC imports many of the world's leading brands, including brands such as Carlo Rossi Wines, Concha y Toro wines, Metaxa Liqueur, Remy Martin Cognac, Guinness, Sutter Home wines, Grant's Whisky, Jagermeister, E&J Gallo, Jim Beam Bourbon, Sierra Tequila, Teacher's Whisky, Campari, Cinzano, Skyy Vodka and Old Smuggler. CEDC is also a leading importer of premium spirits and wines in Russia with such brands as Hennessey, Moet & Chandon and Concha y Toro, among others.
This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding expected sales and earnings guidance, expected gross margins and operating margins, reduced leverage, expectations of increased consumer demand for our products and premiumizations, cost reduction and working capital initiatives and expected results of, and synergies relating to, our Russian businesses. Forward looking statements are based on our knowledge of facts as of the date hereof and involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of CEDC to be materially different from any future results, performance or achievements expressed or implied by our forward looking statements.
Investors are cautioned that forward looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. CEDC undertakes no obligation to publicly update or revise any forward looking statements or to make any other forward looking statements, whether as a result of new information, future events or otherwise, unless required to do so by securities laws. Investors are referred to the full discussion of risks and uncertainties included in CEDC's Form 10-K for the fiscal year ended December 31, 2009, including statements made under the captions "Item 1A. Risks Relating to Our Business" and in other documents filed by CEDC with the Securities and Exchange Commission.
Contact: In the U.S.: Jim Archbold Investor Relations Officer Central European Distribution Corporation 610-660-7817 In Europe: Anna Zaluska Corporate PR Manager Central European Distribution Corporation 48-22-456-6000 |
|
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
Amounts in columns expressed in thousands
(Except share information)
December 31, December 31,
2009 2008
(as adjusted)
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $152,177 $107,601
Restricted cash 481,419 -
Accounts receivable, net of allowance for
doubtful accounts of $56,090 and $22,156
respectively 631,005 430,683
Inventories 221,417 180,304
Prepaid expenses and other current assets 46,654 22,894
Deferred income taxes 83,458 24,386
------------ ------------
Total Current Assets 1,616,130 765,868
Intangible assets, net 778,828 570,505
Goodwill, net 1,726,625 745,256
Property, plant and equipment, net 231,098 92,221
Deferred income taxes 27,123 12,886
Equity method investment in affiliates 67,089 189,243
Subordinated loans to affiliates - 107,707
------------ ------------
Total Non-Current Assets 2,830,763 1,717,818
------------ ------------
Total Assets $4,446,893 $2,483,686
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $266,071 $234,948
Bank loans and overdraft facilities 124,266 109,552
Income taxes payable 4,935 7,227
Taxes other than income taxes 207,168 125,774
Other accrued liabilities 100,266 80,270
Short-term obligations under Senior Notes 358,943 -
Current portions of obligations under
capital leases 1,724 2,385
Deferred consideration 160,880 -
------------ ------------
Total Current Liabilities 1,224,253 560,156
Long-term debt, less current maturities 106,043 170,510
Long-term obligations under capital leases 1,371 2,194
Long-term obligations under Senior Notes 1,205,467 633,658
Long-term accruals 3,214 5,806
Deferred income taxes 198,495 106,485
------------ ------------
Total Long Term Liabilities 1,514,590 918,653
Redeemable noncontrolling interests in
Whitehall Group 22,888 33,642
Stockholders' Equity
Common Stock ($0.01 par value, 80,000,000
shares authorized, 69,411,845 and 47,344,874
shares issued at December 31, 2009 and
December 31, 2008, respectively) 694 473
Additional paid-in-capital 1,296,391 816,490
Retained earnings 264,917 186,588
Accumulated other comprehensive income / (loss) 123,310 (46,772)
Less Treasury Stock at cost (246,037 shares at
December 31, 2009 and December 31, 2008,
respectively) (150) (150)
------------ ------------
Total CEDC Stockholders' Equity 1,685,162 956,629
Noncontrolling interests in subsidiaries - 14,606
------------ ------------
Total Equity 1,685,162 971,235
------------ ------------
Total Liabilities and Stockholders' Equity $4,446,893 $2,483,686
============ ============
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Amounts in columns expressed in thousands
(Except per share information)
Year ended December 31,
2009 2008 2007
(as adjusted)
---------- ---------- ----------
Sales $2,197,542 $2,136,570 $1,483,344
Excise taxes (690,403) (489,566) (293,522)
Net Sales 1,507,139 1,647,004 1,189,822
Cost of goods sold 1,012,543 1,224,899 941,060
---------- ---------- ----------
Gross Profit 494,596 422,105 248,762
========== ========== ==========
Operating expenses 278,448 223,373 130,677
---------- ---------- ----------
Operating Income 216,148 198,732 118,085
========== ========== ==========
Non operating income / (expense), net
Interest (expense), net (80,213) (53,447) (35,829)
Other financial income /
(expense), net 21,864 (132,936) 13,594
Amortization of deferred charges (38,501) - -
Other non operating income, net 824 410 (1,770)
---------- ---------- ----------
Income before taxes, equity in net
income from unconsolidated investments
and noncontrolling interests in
subsidiaries 120,122 12,759 94,080
========== ========== ==========
Income tax expense (22,905) (11,872) 15,910
Equity in net earnings of affiliates (13,102) (9,002) -
---------- ---------- ----------
Net income / (loss) $84,115 ($8,115) $78,170
========== ========== ==========
Less: Net income attributable to
noncontrolling interests in
subsidiaries 2,708 3,680 1,068
Less: Net income attributable to
redeemable noncontrolling interests
in Whitehall Group 3,078 6,803 -
Net income /(loss) attributable to CEDC $78,329 ($18,598) $77,102
========== ========== ==========
Net income / (loss) per share of
common stock, basic $1.46 ($0.42) $1.93
---------- ---------- ----------
Net income / (loss) per share of
common stock, diluted $1.45 ($0.42) $1.91
---------- ---------- ----------
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
Amounts in columns expressed in thousands
Twelve months ended December 31,
2009 2008 2007
(as adjusted)
---------- ---------- ----------
Operating Activities
Net income $84,115 ($8,115) $78,170
Adjustments to reconcile net income to
net cash provided by / (used in)
operating activities:
Depreciation and amortization 14,652 14,786 9,968
Deferred income taxes (32,378) (19,282) 9,957
Unrealized foreign exchange
(gains) / losses (38,760) 133,528 (23,940)
Cost of debt extinguishment - 1,156 11,864
Stock options expense 3,782 3,850 1,866
Hedge revaluation 9,160 - -
Equity income in affiliates 13,101 9,002 -
Gain on remeasurement of previously
held equity interest, net of
impairment (12,418) - -
Amortization of deferred charges 38,501
Other non cash items 1,333 1,314 7,284
Changes in operating assets and
liabilities:
Accounts receivable (53,483) (121,589) (38,812)
Inventories 1,268 (41,712) (21,986)
Prepayments and other current
assets 28,859 17,100 5,865
Trade accounts payable (2,049) 62,459 (880)
Other accrued liabilities and
payables 37,278 19,699 (16,272)
---------- ---------- ----------
Net Cash provided by Operating
Activities 92,961 72,196 23,084
Investing Activities
Investment in fixed assets (18,696) (22,572) (25,787)
Proceeds from the disposal of fixed
assets 3,874 6,943 2,670
Changes in restricted cash (481,419) - -
Purchase of financial assets - (103,500) -
Refundable purchase price related to
Botapol acquisition - - 5,000
Acquisitions of subsidiaries, net of
cash acquired (573,504) (548,799) (141,005)
---------- ---------- ----------
Net Cash used in Investing Activities (1,069,745) (667,928) (159,122)
Financing Activities
Borrowings on bank loans and overdraft
facility 37,399 120,586 13,225
Borrowings on long-term bank loans - 43,192 122,508
Payment of bank loans, overdraft
facility and other borrowings (146,567) (31,935) (30,153)
Payment of long-term borrowings (265,517) - 8
Net Borrowings of Senior Secured Notes 929,569 - -
Payment of Senior Secured Notes - (26,996) (95,440)
Repayment of obligation to former
shareholders (28,814) - -
Hedge closure (14,417) - -
Movements in capital leases payable (1,430) 1,216 445
Issuance of shares in public placement 490,974 233,845 42,354
Transactions with equity holders (7,876) - -
Net Borrowings on Convertible Senior
Notes - 304,403 -
Dividends paid to minority shareholders (2,758) - -
Options exercised 854 1,899 3,976
---------- ---------- ----------
Net Cash provided by Financing
Activities 991,417 646,210 56,923
---------- ---------- ----------
Currency effect on brought forward
cash balances 29,943 (30,744) 7,620
Net Increase / (Decrease) in Cash 44,576 19,734 (71,495)
Cash and cash equivalents at beginning
of period 107,601 87,867 159,362
---------- ---------- ----------
Cash and cash equivalents at end
of period $152,177 $107,601 $87,867
========== ========== ==========
Supplemental Schedule of Non-cash
Investing Activities
Common stock issued in connection with
investment in subsidiaries $81,197 $134,631 $1,693
========== ========== ==========
Supplemental disclosures of cash flow
information
Interest paid $84,694 $55,426 $40,136
Income tax paid $28,118 $33,919 $21,362
========== ========== ==========
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
Amounts in columns expressed in thousands
(Except per share information)
Full Year 2009 Comparable Statement of Operations reconciliation
GAAP A B C
Acquisition
related
costs and FV
2009 FX APB 14 adjustments
-----------------------------------------
Sales $2,197,542
Excise taxes (690,403)
Net Sales 1,507,139 0 0 0
Cost of goods sold 1,012,543
-----------------------------------------
Gross Profit 494,596 0 0 0
=========================================
32.82%
Operating expenses 278,448 (3,732)
-----------------------------------------
Operating Income 216,148 0 0 3,732
=========================================
14.34%
Non operating income / (expense),
net
Interest (expense), net (80,213) 3,916
Other financial (expense), net 21,864 (38,077)
Amortization of deferred
charges (38,501)
Other non operating income /
(expense), net 824
-----------------------------------------
Income before taxes, equity in net
income from unconsolidated
investments and non-controlling
interests in subsidiaries 120,122 (38,077) 3,916 3,732
=========================================
Income tax expense (22,905) 7,996 (1,371) (709)
Equity in net earnings of
affiliates (13,102) 20,899
-----------------------------------------
Net income / (loss) $84,115 ($9,182) $2,545 $3,023
=========================================
Less: Net income / (loss)
attributable to non-controlling
interests in subsidiaries 2,708 ($13,301)
Less: Net income / (loss)
attributable to redeemable
non-controlling interests in
Whitehall Group 3,078
Net income /(loss) attributable
to CEDC $78,329 $4,119 $2,545 $3,023
=========================================
Net income per share of common
stock, basic $1.46
----------
Net income per share of common
stock, diluted $1.45
----------
D E F Comparable
Cost
associated
RAG Inventory with debt
Adjustments Step Up refinancing 2009
------------------------------------------
Sales $2,197,542
Excise taxes (690,403)
Net Sales 0 0 0 1,507,139
Cost of goods sold (3,000) 1,009,543
------------------------------------------
Gross Profit 0 3,000 0 497,596
==========================================
33.02%
Operating expenses 274,716
------------------------------------------
Operating Income 0 3,000 0 222,880
==========================================
14.79%
Non operating income /
(expense), net
Interest (expense), net 7,400 (68,897)
Other financial (expense), net 16,895 682
Amortization of deferred
charges 38,501 0
Other non operating income /
(expense), net 0 824
------------------------------------------
Income before taxes, equity in net
income from unconsolidated
investments and non-controlling
interests in subsidiaries 38,501 3,000 24,295 155,489
==========================================
Income tax expense (7,315) (570) (4,616) (29,490)
Equity in net earnings of
affiliates 7,797
------------------------------------------
Net income / (loss) $31,186 $2,430 $19,679 $133,796
==========================================
Less: Net income / (loss)
attributable to non-controlling
interests in subsidiaries $13,398 $2,805
Less: Net income / (loss)
attributable to redeemable
non-controlling interests in
Whitehall Group $3,078
Net income /(loss) attributable
to CEDC $17,788 $2,430 $19,679 $127,913
==========================================
Net income per share of common
stock, basic $2.38
---------
Net income per share of common
stock, diluted $2.37
---------
A. Represents the net after tax impact of the foreign currency
revaluation related to our USD and EUR liabilities as a majority of
these have been lent down to entities that have the Polish Zloty or
Russian Ruble as their functional currency. Also includes the
proportional net after tax impact of the foreign currency revaluation
related to the foreign currency liabilities included in the earnings
of the Russian Alcohol Group as it has the Russian Ruble as its
functional currency. The amount has been adjusted to reflect only the
CEDC portion of foreign exchange gains or losses of the Russian
Alcohol Group and does not include the portion attributable to the
minority shareholders.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the
accounting treatment for convertible debt instruments that allow for
either mandatory or optional cash settlements. FSP APB 14-1 will
impact the accounting associated with our $310.0 million senior
convertible notes. This FSP requires us to recognize additional non-
cash interest expense on a retrospective basis, based on the market
rate for similar debt instruments without the conversion feature.
Furthermore, it requires recognizing interest expense in prior periods
pursuant to the retrospective accounting treatment. FSP APB 14-1 has
become effective beginning in our first quarter of 2009 and is
required to be applied retrospectively to all presented periods, as
applicable.
C. Represents one off expenses related to acquisitions and other non cash
charges. The expenses primarily consisting of a $225.6 gain on the
re-measurement of previously held equity interest in the Russian
Alcohol Group, which was partially offset by a $162.0 charge related
to non-amortized discount of deferred consideration resulting from the
accelerated buyout of Lion's interest in the Russian Alcohol Group.
Also included in the adjustment is an impairment charge taken in the
second quarter of 2009 of $20.0 million, legal and professional costs
of $19.6 million and various other purchase price fair value
adjustments.
D. The Company had recorded deferred payments to Lion in connection with
the RAG acquisition on the balance sheet at fair value and amortizes
this discount as a non cash amortization expense over the payment
period and records its investment in RAG as if it owned Lions shares.
This adjustment (a) eliminates the non-cash amortization (b) increases
the minority interest for the net profit attributable to the shares
held by Lion Capital to reflect CEDC results as if it owned 58% of RAG
without amortization of the deferred payments to Lion and (c) adjusts
the fully diluted shares to reduce by shares not yet issued to Lion
Capital but will be issued in the future in connection with CEDC's
acquisition of Lion Capital's remaining interest in RAG. As of
December 2009, the Company acquired 100% of Russian Alcohol and
therefore these adjustments will not impact future periods.
E. Represents the expense related to the step up of the inventory
valuation of the Russian Alcohol Group at the time of acquisition.
F. Represents costs associated with the refinancing of debt completed in
December 2009, including $16.9 of costs associated with the closing of
the Russian credit facilities including the write-off of the
capitalized financing costs and $7.4 million of double interest as
both the new and old facilities were in place during December 2009.
4th quarter 2009 Comparable Statement of Operations reconciliation
GAAP A B C
Acquisition
related
costs and FV
Q4-09 FX APB 14 adjustments
---------------------------------------
Sales $790,067 $0 $0 $0
Excise taxes (253,024) 0 0 0
Net Sales 537,043 0 0 0
Cost of goods sold 353,135 0 0 0
---------------------------------------
Gross Profit 183,908 0 0 0
=======================================
34.24%
Operating expenses 270,080 0 0 (191,992)
---------------------------------------
Operating Income (86,172) 0 0 191,992
=======================================
-16.05%
Non operating income /
(expense), net
Interest (expense), net (28,697) 0 984 0
Other financial (expense), net (3,317) (13,208) 0 0
Amortization of deferred
charges (11,078) 0 0 0
Other non operating income /
(expense), net 9,785 0 0 (9,051)
---------------------------------------
Income before taxes, equity in net
income from unconsolidated
investments and noncontrolling
interests in subsidiaries (119,479) (13,208) 984 182,941
=======================================
Income tax expense 23,454 2,293 (502) (43,221)
Equity in net earnings of
affiliates 3,911 1,952 0 0
---------------------------------------
Net income / (loss) ($92,114) ($8,963) $482 $139,720
=======================================
Less: Net income / (loss)
attributable to noncontrolling
interests in subsidiaries $523 $0 $0 $0
Less: Net income / (loss)
attributable to redeemable
noncontrolling interests in
Whitehall Group $2,245 $0 $0 $0
Net income /(loss) attributable
to CEDC ($94,882) ($8,963) $482 $139,720
=======================================
Net income per share of common
stock, basic ($1.52)
--------
Net income per share of common
stock, diluted ($1.52)
--------
D E F Comparable
Cost
associated
RAG Inventory with debt
Adjustments Step Up refinancing Q4-09
-------------------------------------------
Sales $0 $0 $0 $790,067
Excise taxes 0 0 0 (253,024)
Net Sales 0 0 0 537,043
Cost of goods sold 0 (3,000) 0 350,135
-------------------------------------------
Gross Profit 0 3,000 0 186,908
===========================================
34.80%
Operating expenses 0 0 0 78,088
-------------------------------------------
Operating Income 0 3,000 0 108,820
===========================================
20.26%
Non operating income /
(expense), net
Interest (expense), net 0 0 7,400 (20,313)
Other financial (expense), net 0 0 16,895 370
Amortization of deferred
charges 11,078 0 0 0
Other non operating income /
(expense), net 0 0 0 734
-------------------------------------------
Income before taxes, equity in net
income from unconsolidated
investments and noncontrolling
interests in subsidiaries 11,078 3,000 24,295 89,611
===========================================
Income tax expense (2,131) 4,482 (4,616) (20,241)
Equity in net earnings of
affiliates 0 0 0 5,863
-------------------------------------------
Net income / (loss) $8,947 $7,482 $19,679 $75,233
===========================================
Less: Net income / (loss)
attributable to noncontrolling
interests in subsidiaries $2 $0 $0 $525
Less: Net income / (loss)
attributable to redeemable
noncontrolling interests in
Whitehall Group $0 $0 $0 $2,245
Net income /(loss) attributable
to CEDC $8,945 $7,482 $19,679 $72,463
===========================================
Net income per share of common
stock, basic $1.16
----------
Net income per share of common
stock, diluted $1.15
----------
A. Represents the net after tax impact of the foreign currency
revaluation related to our USD and EUR liabilities as a majority of
these have been lent down to entities that have the Polish Zloty or
Russian Ruble as their functional currency.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the
accounting treatment for convertible debt instruments that allow for
either mandatory or optional cash settlements. FSP APB 14-1 will
impact the accounting associated with our $310.0 million senior
convertible notes. This FSP requires us to recognize additional non-
cash interest expense on a retrospective basis, based on the market
rate for similar debt instruments without the conversion feature.
Furthermore, it requires recognizing interest expense in prior periods
pursuant to the retrospective accounting treatment. FSP APB 14-1 has
become effective beginning in our first quarter of 2009 and is
required to be applied retrospectively to all presented periods, as
applicable.
C. Represents one off non-cash items including in operating profit,
primarily related to the account treatment for the Russian Alcohol
acquisition. Includes a $162 charge related to non-amortized discount
of deferred consideration resulting from the accelerated buyout of
Lion's interest in the Russian Alcohol Group, legal and professional
costs associated with the transaction and various purchase price fair
value adjustments. Approximately $9.0 million of acquisition related
expenses have been reclassified from other non-operating expense to
operating expenses.
D. The Company had recorded deferred payments to Lion in connection with
the RAG acquisition on the balance sheet at fair value and amortizes
this discount as a non cash amortization expense over the payment
period and records its investment in RAG as if it owned Lions shares.
This adjustment (a) eliminates the non-cash amortization (b) increases
the minority interest for the net profit attributable to the shares
held by Lion Capital to reflect CEDC results as if it owned 58% of RAG
without amortization of the deferred payments to Lion and (c) adjusts
the fully diluted shares to reduce by shares not yet issued to Lion
Capital but will be issued in the future in connection with CEDC's
acquisition of Lion Capital's remaining interest in RAG. As of
December 2009, the Company acquired 100% of Russian Alcohol and
therefore these adjustments will not impact future periods.
E. Represents the expense related to the step up of the inventory
valuation of the Russian Alcohol Group at the time of acquisition.
F. Represents costs associated with the refinancing of debt completed in
December 2009, including $16.9 of costs associated with the closing of
the Russian credit facilities including the write-off of the
capitalized financing costs and $7.4 million of double interest as
both the new and old facilities were in place during December 2009.
Full Year 2008 Comparable Statement of Operations reconciliation
GAAP A B C
Tax loss
valuation
2008 FX APB 14 allowance
--------------------------------------------
Sales $2,136,570
Excise taxes (489,566)
Net Sales 1,647,004 0 0 0
Cost of goods sold 1,224,899
--------------------------------------------
Gross Profit 422,105 0 0 0
============================================
28.01%
Operating expenses 223,373
--------------------------------------------
Operating Income 198,732 0 0 0
============================================
13.19%
Non operating income /
(expense), net
Interest (expense), net (53,447) 3,087
Other financial (expense),
net (132,936) 132,936
Amortization of deferred
charges 0
Other non operating income /
(expense), net 410
--------------------------------------------
Income before taxes, equity in
net income from unconsolidated
investments and non-controlling
interests in subsidiaries 12,759 132,936 3,087 0
============================================
Income tax expense (11,872) (26,403) (1,080) 8,693
Equity in net earnings of
affiliates (9,002) 22,255
--------------------------------------------
Net income / (loss) ($8,115) $128,788 $2,007 $8,693
============================================
Less: Net income / (loss)
attributable to non-controlling
interests in subsidiaries 3,680
Less: Net income / (loss)
attributable to redeemable
non-controlling interests in
Whitehall Group 6,803
Net income /(loss) attributable
to CEDC ($18,598) $128,788 $2,007 $8,693
============================================
Net income per share of common
stock, basic ($0.42)
----------
Net income per share of common
stock, diluted ($0.42)
----------
D E F Comparable
Acquisition Cost
related associated
RAG costs and FV with debt
Adjustments adjustments refinancing 2008
---------------------------------------------
Sales $2,136,570
Excise taxes (489,566)
Net Sales 0 0 0 1,647,004
Cost of goods sold 1,224,899
---------------------------------------------
Gross Profit 0 0 0 422,105
=============================================
28.01%
Operating expenses (8,217) 215,156
---------------------------------------------
Operating Income 0 8,217 0 206,949
=============================================
13.73%
Non operating income /
(expense), net
Interest (expense), net 0 (50,360)
Other financial (expense), net 0
Amortization of deferred
charges 0 0
Other non operating income /
(expense), net 548 958
---------------------------------------------
Income before taxes, equity in net
income from unconsolidated
investments and non-controlling
interests in subsidiaries 0 8,217 548 157,547
=============================================
Income tax expense 0 (1,561) (104) (32,327)
Equity in net earnings of
affiliates 13,253
---------------------------------------------
Net income / (loss) $0 $6,656 $444 $138,472
=============================================
Less: Net income / (loss)
attributable to non-controlling
interests in subsidiaries $3,680
Less: Net income / (loss)
attributable to redeemable
non-controlling interests in
Whitehall Group $6,803
Net income /(loss) attributable
to CEDC $0 $6,656 $444 $127,989
=============================================
Net income per share of common
stock, basic $2.90
---------
Net income per share of common
stock, diluted $2.86
---------
A. Represents the net after tax impact of the foreign currency
revaluation related to our USD and EUR liabilities as a majority of
these have been lent down to entities that have the Polish Zloty or
Russian Ruble as their functional currency. Also includes the
proportional net after tax impact of the foreign currency revaluation
related to the foreign currency liabilities included in the earnings
of the Russian Alcohol Group as it has the Russian Ruble as its
functional currency. The amount has been adjusted to reflect only the
CEDC portion of foreign exchange gains or losses of the Russian
Alcohol Group and does not include the portion attributable to the
minority shareholders.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the
accounting treatment for convertible debt instruments that allow for
either mandatory or optional cash settlements. FSP APB 14-1 will
impact the accounting associated with our $310.0 million senior
convertible notes. This FSP requires us to recognize additional non-
cash interest expense on a retrospective basis, based on the market
rate for similar debt instruments without the conversion feature.
Furthermore, it requires recognizing interest expense in prior periods
pursuant to the retrospective accounting treatment. FSP APB 14-1 has
become effective beginning in our first quarter of 2009 and is
required to be applied retrospectively to all presented periods, as
applicable.
C. During the fourth quarter of 2009, the company took additional non
cash tax provisions primarily for a tax loss carry forward in Poland.
Due to the level of foreign exchange losses incurred in 2008,
management has determined that a portion of prior period tax losses
will not be utilized in the future and has therefore taken a onetime
charge for this.
D. None
E. On June 30, 2008, CEDC terminated operations of the German import
business acquired as part of the Parliament acquisition and in July
2008, moved all German import operations to a 3rd party importer. The
amount includes $1.461 million of net loss incurred by the
discontinued operation for the 12 months ended December 31, 2008.
Additionally $4.536 million of clean up related charges were
reflected in CEDC's proportional share of net income from the Russian
Alcohol Group. These charges related to clean up of historical issues
that stemmed from actions before acquisition in July 2008.
F. Represents the net after tax impact associated with the early
retirement of 20% of CEDC's outstanding Senior Secured Notes,
including an 8% one-time redemption premium payment to the Noteholders
and write-off of prepaid financing costs in 2007 and costs associated
with retirement of $14 million of the Senior Secured Notes in 2008. .
4th quarter 2008 Comparable Statement of Operations reconciliation
GAAP A B C
One-Off
Non Cash
Q4-08 FX APB 14 Adjustments
------------------------------------------
Sales $599,606 $0 $0 $0
Excise taxes (139,965) 0 0 0
Net Sales 459,641 0 0 0
Cost of goods sold 323,322 0 0 0
------------------------------------------
Gross Profit 136,319 0 0 0
==========================================
25.38%
Operating expenses 58,738 0 0 0
------------------------------------------
Operating Income 77,581 0 0 0
==========================================
14.45%
Non operating income /
(expense), net
Interest (expense), net (10,625) 0 0 0
Other financial (expense),
net (139,309) 139,309 0 0
Amortization of deferred
charges 0 0 0 0
Other non operating income /
(expense), net 975 0 0 0
------------------------------------------
Income before taxes, equity in
net income from unconsolidated
investments and noncontrolling
interests in subsidiaries (71,378) 139,309 0 0
==========================================
Income tax expense 4,819 (29,719) 0 8,693
Equity in net earnings of
affiliates (10,991) 11,465 0 0
------------------------------------------
Net income / (loss) ($77,550) $121,055 $0 $8,693
==========================================
Less: Net income / (loss)
attributable to noncontrolling
interests in subsidiaries $1,194 $0 $0 $0
Less: Net income / (loss)
attributable to redeemable
noncontrolling interests in
Whitehall Group $3,527 $0 $0 $0
Net income /(loss) attributable
to CEDC ($82,271) $121,055 $0 $8,693
==========================================
Net income per share of common
stock, basic ($1.76)
--------
Net income per share of common
stock, diluted ($1.76)
--------
D E F Comparable
Cost
associated
RAG Acquisition with debt
Adjustments related costs refinancing Q4-08
---------------------------------------------
Sales $0 $0 $0 $599,606
Excise taxes 0 0 0 (139,965)
Net Sales 0 0 0 459,641
Cost of goods sold 0 0 0 323,322
---------------------------------------------
Gross Profit 0 0 0 136,319
=============================================
25.38%
Operating expenses 0 (5,600) 0 53,138
---------------------------------------------
Operating Income 0 5,600 0 83,181
=============================================
15.49%
Non operating income / (expense),
net
Interest (expense), net 0 0 0 (10,625)
Other financial (expense), net 0 0 0 0
Amortization of deferred
charges 0 0 0 0
Other non operating income /
(expense), net 0 0 548 1,523
---------------------------------------------
Income before taxes, equity in
net income from unconsolidated
investments and noncontrolling
interests in subsidiaries 0 5,600 548 74,079
=============================================
Income tax expense 0 (1,064) (104) (17,375)
Equity in net earnings of
affiliates 0 0 0 474
---------------------------------------------
Net income / (loss) $0 $4,536 $444 $57,178
=============================================
Less: Net income / (loss)
attributable to noncontrolling
interests in subsidiaries $0 $0 $0 $1,194
Less: Net income / (loss)
attributable to redeemable
noncontrolling interests in
Whitehall Group $0 $0 $0 $3,527
Net income /(loss) attributable
to CEDC $0 $4,536 $444 $52,457
=============================================
Net income per share of common
stock, basic $1.12
--------
Net income per share of common
stock, diluted $1.11
--------
A. Represents the net after tax impact of the foreign currency
revaluation related to our USD and EUR liabilities as a majority of
these have been lent down to entities that have the Polish Zloty or
Russian Ruble as their functional currency. Also includes the
proportional net after tax impact of the foreign currency revaluation
related to the foreign currency liabilities included in the earnings
of the Russian Alcohol Group as it has the Russian Ruble as its
functional currency. The amount has been adjusted to reflect only the
CEDC portion of foreign exchange gains or losses of the Russian
Alcohol Group and does not include the portion attributable to the
minority shareholders.
B. None
C. During the fourth quarter of 2009, the company took additional non
cash tax provisions primarily for a tax loss carry forward in Poland.
Due to the level of foreign exchange losses incurred in 2008,
management has determined that a portion of prior period tax losses
will not be utilized in the future and has therefore taken a onetime
charge for this.
D. None
E. The amount includes $4.536 million of clean up related charges were
reflected in CEDC's proportional share of net income from the Russian
Alcohol Group. These charges related to clean up of historical issues
that stemmed from actions before acquisition in July 2008.
F. Represents the net after tax impact associated with the early
retirement of 20% of CEDC's outstanding Senior Secured Notes,
including an 8% one-time redemption premium payment to the Noteholders
and write-off of prepaid financing costs in 2007 and costs associated
with retirement of $14 million of the Senior Secured Notes in 2008.
Full Year 2010 Comparable EPS RECONCILIATION
Full Year Guidance, 12 Months Ending December 31, 2010
------------------------------------------------- ----
Range for GAAP Fully Diluted Earnings per Share $2.46
$2.58
-----
A. Foreign exchange impact related to USD and EUR
denominated financing $0.00
B. Impact of adoption of ABP14 $0.04
---------------------------- -----
Range for Comparable non-GAAP Fully Diluted
Earnings per Share $2.50
$2.62
-----
A. Represents the net after tax impact of the foreign currency
revaluation related to our USD and EUR financing as a majority of
these borrowings have been lent down to entities that have the Polish
Zloty or Russian Ruble as their functional currency. The impact of
foreign exchange revaluation is inherently unpredictable and we have
not forecasted the impact thereof; changes in foreign exchange
revaluation may have a material effect on our financial results.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the
accounting treatment for convertible debt instruments that allow for
either mandatory or optional cash settlements. FSP APB 14-1 will
impact the accounting associated with our $310.0 million senior
convertible notes. This FSP requires us to recognize additional non-
cash interest expense on a retrospective basis, based on the market
rate for similar debt instruments without the conversion feature.
Furthermore, it requires recognizing interest expense in prior periods
pursuant to the retrospective accounting treatment. FSP APB 14-1 has
become effective beginning in our first quarter of 2009 and is
required to be applied retrospectively to all presented periods, as
applicable.
SOURCE Central European Distribution Corporation
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